Has Foursquare's Early API Launch Helped It Outpace Gowalla?

Early adopters have seen this before — friend invites from
“normals” pouring in (Facebook, 2008), big brands arriving
(Twitter, 2009) and servers failing as a team struggles to
scale (Twitter, 2006–2010) — yes, Foursquare is
taking off and even going
mass.

Given the explosion of smartphones, a “location-based
service” taking off is hardly surprising. But what has made
Foursquare’s ascent noteworthy, even suspenseful, has been
its race with Gowalla.
The competition
between the two has been well-covered in the tech media
and deservedly so: Though one is in New York and
the other in Austin, they do pretty much the same thing and
launched around the same time – it appeared to be an even
match.

Although it may be too soon to declare a winner, it isn’t too
early to look at why this is happening. While there are
many differences worth examining, a recent visit to the Foursquare app store has made
me wonder if Foursquare’s early release of its API has
given them a meaningful boost. (Editor's note: We
have
declared a winner: Foursquare. See more
here.)

For those unfamiliar, APIs (Application
Programming Interfaces) allow outside developers to quickly
build additional services using the data and functionality
of an OS, application or website. Sometimes the APIs carry
a cost to use, though often they’re free of charge.

For a new site, releasing APIs enables what Caterina Fake,
co-founder of Flickr, called “BizDev
2.0” – a fast, mostly lawyer-free way to turn a service into
a platform. When building an audience any network effects
help, and while the focus is often on users attracting other
users, APIs provide their own value.

API development can spread awareness to new users, increase
engagement with additional functionality and yield entirely
new use cases. Those are pretty distinct competitive
advantages and ones that a startup should obviously embrace.
In the case of Foursquare vs. Gowalla, Foursquare did it
first.

Although it doesn’t yet appear that any of the apps have
been widely embraced, like, say, TweetDeck for Twitter,
behind all them are API-evangelists. The developers are out there
promoting their work, explaining Foursquare to their moms,
and generally rooting on Foursquare’s success.

While the developers might eventually work with both APIs,
being first to feed the hunger for location data has
most certainly helped Foursquare capture
developer attention to the detriment of Gowalla – these
influencers had signed onto Foursquare before Gowalla even
fielded a team. In a quick sprint for supremacy, this advantage
may have been the deciding factor.

There are, of course, some unanswered questions:

Exactly how much incremental usage has the API generated
and are the network effects of all of these apps just a
blip compared to, say, the larger social graphs (to say
nothing of the more frequent boozing) of New Yorkers vs.
Hill Country Texans?

Can Gowalla catch up or overtake Foursquare through an
even more-aggressive approach to their API or, for that
matter, through some other means?

Answering these questions, asking more, and getting a fix on an
API ROI will yield considerable benefits for internet
entrepreneurs. We’re watching in real-time as the market
determines a winner in Location Based Services – a likely
b-school case study in the making.

And following closely as these companies maneuver will be
incredibly informative for start-ups in any category.

Paul Marcum, a former Yahoo! and one-time Shake Shack Mayor,
is working on a new startup. It will have an API. He can be found
on Twitter at @jpmarcum and blogs at
http://marcum.com, where this
post was originally published.